AmLaw: How these revelations impact the various investigations of BofA's conduct regarding the Merrill merger is unclear. As you know by now, the Securities and Exchange Commission has filed suit against BofA, claiming the bank violated disclosure rules by failing to adequately inform shareholders about Merrill's plans to pay up to $5.8 billion in bonuses. The House Committee on Oversight and Government Reform and the New York attorney general's office are investigating similar allegations.

We have to say, we're with ATL on this one. Wachtell was representing BofA, which, right or wrong, had just agreed to take on Merrill, a bank whose numbers it discovered were increasingly "horrible." The government did not want BofA to pull out and everyone was playing hardball. No one was under oath; they were all playing their respective parts. It's even possible that Hank Paulson and friends over-stressed the impact BofA getting out of the deal would have on the economy as a whole.

Did Wachtell have a responsbility to lay all of its cards out to the government? And if Wachtell had told the government the chance of success of enforcing the MAC was tenuous and then decided to do it anyway, we can all bet the government would have made those conversations public.

Further, when you are one side against several others, your job is to know the position of the other players. The government was aware of the BofA/Merrill deal terms and had access to at least some of the Merrill numbers. It was just as capable of figuring out whether or not BofA really could enforce the MAC as anyone else.

Wachtell pointed out to BofA that no Delaware court has ever found that a MAC occurred permitting an acquiror to terminate a merger agreement. That fact alone, discoverable via some quick Westlaw research, should have been a tipoff Wachtell was posturing.

The fact that it is a world-class firm representing a sophisticated client in a very high-stress, high stakes situation is also a clue there may have been some exaggeration.

No doubt the Congressional committee looking into BofA's behavior on the deal will not be pleased if BofA's attorneys were not completely forthright with the Treasury and Hank Paulson. But they shouldn't feign surprise.